A lot has changed in the 20 years since Federal Reserve Vice Chairman Alan Blinder had the audacity to suggest that the Fed could use interest-rate policy to help reduce unemployment in the short term.
It was blasphemy then, and though the Fed had a dual mandate to maintain both "price stability" and full employment, his remarks ignited a firestorm of controversy.
Now, thanks to the Great Recession and Ben Bernanke's willingness to use 0 percent interest rates and venture into uncharted territory with quantitative easing, the "dual mandate" is widely accepted.
Both Bernanke and current Fed Chair Janet Yellen also spoke out in favor of using fiscal policy that includes deficit spending to increase employment, something that Fed chairs didn't say in the past.
In a recent speech, Yellen noted that "the lack of fiscal support for demand in recent years also helps account for the weakness of this recovery compared with past recoveries."
These are important institutional advances, even if other branches of government are not smart enough to take advantage of free money to create some of the millions of jobs that are so desperately needed.
But today's Fed could still be a threat to full employment if it proceeds too early with the "normalization" of interest rates that even Yellen is talking about. The talk is of normalizing interest rates next year, and that is too early.
To "normalize" interest rates by beginning to raise short-term rates, we would want to see at the very least a "normalized" labor market. Unemployment at 5.8 percent might look like it is getting somewhat close to "normal," but other statistics show that it is not.
We can look at the percentage of prime-age workers - 25 to 54 years old - who are working, and it has not recovered even half of its loss since the peak before the Great Recession. This is due to people dropping out of the labor force and therefore not being counted as unemployed.
As my colleague Dean Baker has pointed out, it would take an additional seven million to eight million jobs to get us back to prerecession levels of employment. Another measure of the economy's current weakness is lost output: the Congressional Budget Office estimates that we are 4 percentage points below our potential gross domestic product - or a loss of about $2,000 per person.
The percentage of long-term unemployed - those out of work for at least six months - is also still about twice its prerecession level; and these people can become permanently unemployed if they are without work for too long.
African Americans have about twice the unemployment rate as do white workers. And wages have barely risen more than inflation in more than five years of recovery.
Some analysts think that the Fed should hold off on raising interest rates, but only until real, inflation-adjusted wages begin to rise. But this would only perpetuate the intolerable increase in inequality that the majority of this country has suffered for more than three decades. Wages can safely rise faster than inflation not only because productivity - output per worker - increases annually, but also because profits are extraordinarily high. There is a lot of catching up to do, and the Fed shouldn't cut it off early.
With inflation still running at 1.7 percent and risks such as the slowing world economy, there's no excuse for the Fed to throw people out of work by raising interest rates.
Let's hope that public pressure and an improved debate over Fed policy can keep this country moving toward full employment.